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Often, I get asked this by Boards of Directors, and my answer is always: it depends. This decision is dependent on the business hurdles you want to conquer, and what stage your company is at. Are you on a public exchange? Are you turning around an organization? Start-up? Backed by Private Equity or Hedge Fund? What are the circumstances of the business? Is it well run and now needs to grow? How involved is the board?
I recently had the opportunity to interview several Venture Capitalists and asked them what was currently working for them. It was interesting to hear that their more successful portfolio companies have first time CEOs. I then asked them what that could be attributed to? They told me that they felt that first time CEOs came with an open mind, and collaborated with the board, and worked harder to prove themselves. 
In small, upstart companies, these CEO’s also courageously roll up their sleeves and participate in whatever project needs to get done (even if it is brewing a pot of coffee to keep the team going). These CEOs came to work with what is called “a beginner’s mind”. It is also interesting to note that 80% of the Venture people I interviewed also did not have products that have any sales, yet.
I thought I might interview a few additional Board Members to learn more. That included publicly traded companies, and companies with both significant revenue (over 100M) and products on the market. Interestingly, these people feel differently. They want the proven executive. They believe that they de-risk the hiring decision by hiring someone who has handled a very similar situation, in a similar market, with similar customers. 
They want someone familiar with the intricacies of speaking with the public markets, fostering relationships with the board of directors, and leading management teams.
This sentiment also shared for private equity investors, hedge fund boards, and people on the board of a turn-around organization. Managing a similar challenge successfully is what they are looking for. 
This is critically important, as this board of directors is looking to maximize the value of the company in a short period of time. There is no room for failure. It is also important that the CEO has experience in this specific market, too.
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